EU approves creation of unitary patent system

After nearly 40 years of discussion, a unitary patent system for the European Union is set to become a reality. In December 2012, the European Parliament approved the legislation necessary to create a streamlined system for obtaining EU-wide patent protection and a complementary unified patent court system.

Twenty-five EU member states have agreed to take part in the new regime, with Spain and Italy currently opting out. On Feb. 19, 24 EU member states signed an international agreement setting up a unified patent court, with Spain, Bulgaria and Poland opting out of this single, specialized patent jurisdiction. Many of the details of the new unitary patent and unified patent court are yet to be determined, and the system will go into effect in 2014 at the earliest, although it’s more than likely to take a few additional years before it goes live.

“Any new system will come with a ton of growing pains … but it’s going to be a wonderful tool,” says Alain Villeneuve, a shareholder at Vedder Price in Chicago. “Essentially, the system is going to be the same as in the U.S.: You won’t need to go to the court in London and then the court in Paris … just as if I win in Illinois I don’t have to go to Hawaii and get another ruling. My read on it is that it’s not only a step toward the future, but it’s a step toward Europe becoming the United States of Europe.”

Streamlined Process

The unitary system means that patentees will have the option to apply to the European Patent Office (EPO, a body of the European Patent Organisation) for an EU unitary patent valid across the 25 participating member states.

The unitary patent will significantly streamline the process and reduce the costs of obtaining an EU-wide patent (see “Big Savings”). Previously, applicants only had the option to file for a “classical” European patent, which required separate approval from each member state, or to file separately in each member state for a national patent. Both of those options, which patent applicants will retain, result in multiple patents in multiple languages. The new regime will have a cohesive, truly unitary effect that the EU previously lacked.

The unified patent court, which will have jurisdiction not only over the new unitary patents but over existing European patents as well, promises to eliminate multiple parallel court proceedings and potentially clashing results across jurisdictions and eventually to enhance legal certainty.

It will have exclusive jurisdiction over civil litigation related to infringement and validity for the unitary patents and the classical European patents. The court system will consist of a Court of First Instance (comprising local/regional divisions and a central division with sites in Paris, London and Munich) and a Court of Appeal (sited in Luxembourg), and it will refer questions of EU law to the European Court of Justice.

Growing Pains

Although the new system will have its benefits, it also has its share of drawbacks.

The new court system will provide a uniform decision that applies across all the participating countries. The clearest downside there is the risk that the uniform decision will be an adverse one. A patentee could see a single court revoke its patent, or deliver a finding of noninfringement, not just in a single member state, but across the EU.

Layer on top of that concern a host of uncertainties about the new, untried and untested regime: Lawyers point out that neither judges nor litigators designed the system, and it isn’t clearly based on any of the existing European systems. It’s yet to be determined how judges will be appointed, and they may have varying levels of experience in patent law. Nokia Corp. and Ericsson are among the critics that say the system could encourage forum-shopping and favor nonpracticing entities.

“At the moment, if you go talk to a U.S. lawyer or a U.K. lawyer or a German lawyer—a lawyer in most developed legal systems—they can give you a pretty good idea of how it’s all going to work, and some idea of what the outcome will be,” says Philip Westmacott, a senior partner at Bristows in London. Westmacott had an active role in discussions regarding the drafting of the new patent and court system. “When you’re starting, as we are here, with a new system … you can see that a typical patent counsel in a major patentee company, particularly in the early years, is going to be saying, ‘I’m not sure that I want to risk my patent portfolio in a court where I’m so uncertain as to how it’s going to work.’”

Fractured Effects

Westmacott says he’s heard that some companies, particularly pharmaceuticals, are very likely to file national patents so as not to risk losing their valuable patents across the EU.

Companies that opt to do so will retain some level of predictability, at least in the major jurisdictions. Of course, if this becomes a common practice, it will lead to less harmonization across member states—just the opposite of what the new system is intended to do.

“It remains to be seen how the new system overcomes the initial hurdles and the skepticism of the users,” says Gerd Jaekel, a partner at Jones Day in Munich and Düsseldorf, Germany. “It is all a glass bowl in front of us. People are very interested in such a system, and it will be a very good tool for us; however, it may take some years until we get there.”